Under the deal, the two partners will create Base Media, a joint venture production company to develop and produce cutting-edge VFX-driven films for China and international markets. Financial terms were not disclosed.

"With CMC’s strong resources, operational experiences and financial support, Base will expand its efforts in developing talent, tools and creating content for the next generation of Chinese cinema," said Base FX founder and CEO Christopher Bremble.

The Beijing-based VFX studio is the largest company of its kind in China, with over 450 employees working in studios in Beijing, Wuxi and Xiamen. The company has an existing strategic partnership with Lucasfilm's Industrial Light and Magic, and it has worked on numerous Hollywood pictures, including Transformers: Age of Extinction, Captain America: The Winter Soldier and Pacific Rim. The studio was also the lead visual effects company behind Chinese blockbuster Monster Hunt, the country's highest-grossing film ever.

"China is the fastest growing film market in the world, soon to be the largest," said Li Ruigang, chairman of CMC, adding, "Seven out of the 10 highest-grossing films in China are visual effects-driven films, and Base FX worked on three of them: Transformers: Age of Extinction, Jurassic World and Monster Hunt."

Although the Chinese domestic industry has made strong gains against Hollywood in recent years — Chinese movies claimed 61.6 percent market share at the Chinese box office last year, a 7 percent surge from the year prior — visual effects is one area where the Chinese industry still lags behind.

"It remains a challenging market, with budgets consistently short of appetites, but we believe in the local market and we’ve been successful at generating a positive outcome for the business and for our clients," Bremble told THR by email after the deal.

Given that the Chinese box office is on track to surpass North America as the world's largest film market before the end of next year, Chinese production budgets are expected to steadily climb — which is already accommodating greater outlays on Hollywood-style VFX. Bremble says that nearly 50 percent of the studio's project work has been from Chinese clients since 2012.

Projects in the pipeline for Base Media include China’s first epic disaster picture. The partners say the film will be made in China and delivered with Hollywood-quality effects. Base Media also is developing and producing a fantasy franchise based on a classic Chinese story, utilizing VR technology. This project will be made in partnership with a major American studio for global distribution, the partners said in a statement. Both projects are untitled as of yet.

"We decided to invest in Base FX and co-found Base Media to create VFX-driven spectacles made in China, not only because of the huge potential in VFX spectacles," Li said, "but also because visual effects will be a key factor that drives innovation in many aspects for Chinese cinema, such as the subject matter, storytelling style and business models."

In late 2015, China Media Capital made worldwide headlines with the announcement of Flagship Entertainment Group, a major joint venture with Warner Bros. that will develop, distribute and produce a slate of Chinese-language tentpole films for distribution in China and around the world.

CMC Holdings also has invested in such ventures as Oriental DreamWorks, DreamWorks Animation’s Chinese joint venture, and Imax China. It acquired 21st Century Fox's 47 percent stake in Star China TV in 2014. CMC's chairman, Li Ruigang, was formerly the CEO of Shanghai Media Group, where he was credited with transforming the regional broadcaster into one of China’s largest media companies.

"As a part of CMC Holdings, we also believe that engaging with other CMC portfolio companies will allow Base to remain focused on its core business, with strong partners in distribution, talent, marketing, social media and finance," Bremble added.